Five charts show how Germany's gas exposure

180
2
Five charts show how Germany's gas exposure

FRANKFURT Reuters -- Germany, largely dependent on Russian gas to fuel its export-led economy and to keep its homes warm, is bracing for a total halt in Russian supplies if Moscow steps up its use of gas as an economic weapon against the West while it wages war in Ukraine.

Since last year, Russian gas flows have slowed further through the important Nord Stream 1 pipeline this month, and Berlin has moved to the second of three stages of its supply emergency plan.

Industry executives and economists are trying to figure out how Europe's largest economy will fare in the coming months and beyond, and where it is particularly vulnerable.

Germany is known for its cars, and its machine tools fill factories throughout China, but sectors that are most likely to be hardest hit are its glass and chemicals industries.

Below are five charts that show Germany's exposure:

The Nord Stream 1 pipeline from Russia through the Baltic Sea is the most important direct gas route into Germany, with flows already down to 40% of capacity, with Russia citing problems with turbines and sanctions.

There is concern that a planned routine maintenance period could mean the pipeline closes for good against the background of the hostilities.

In the event, storage caverns could not be filled in time for the winter heating season, which is just three months away.

Gas flows to Europe are curtailed via routes linking Russia with Slovakia, the Czech Republic and Austria via Ukraine and on another route through Belarus and Poland.

The German industry, which includes Volkswagen and Siemens, is the biggest consumer of gas, but half of all households, which heat with gas, aren't far behind.

Emergency plans say homes should be prioritised if the state is forced into rationing, alongside hospitals and essential services, but there are also calls to make households part of savings programmes.

Germany's chemical sector is the biggest consumer of gas in the industries that use it for their processes. According to Moody's, BASF alone uses 4% of Germany's gas at its Ludwigshafen site.

European chemicals producers could face at least two winters with tight gas supplies due to reduced gas availability, Moody's Investors Service said in a research note that costs would go up as well.

In the second half of 2022, a complete halt to Russian natural gas exports could cost Germany 12.7% of its economic performance, according to the Bavarian vbw industry association. That would result in 193 billion euros $203 billion in total economic losses.

Germany is famous for its cars but the industries that stand to see their activities curtailed by lack of gas are glass, iron and steel, ceramics, food and printing, with huge knock-on effects on other sectors.